I am filling in for Scott tonight who returns on Monday.
CALL Play Updates
Dresser-Rand Group - DRC - close 38.36 change +0.13 stop 36.15
Target(s): 39.00, 39.95, 41.40
Key Support/Resistance Areas: 42.00, 40.00, 39.15, 37.50, 36.30
Current Option Gain/Loss: +7.1%
Time Frame: 2 to 3 weeks
New Positions: Yes
10/16 (James): There is really no change from my comments on Thursday. DRC is bouncing around the $38.00-39.00 level with short-term support at $38.00. The pattern is bullish with a trend of higher lows as the stock tries to breakout over $39.00. If DRC can breakout from this pattern I would expect shares to challenge their all-time highs in the $42-44 zone so readers may want to adjust their targets higher. However, cautious traders do not want to hold over the earnings report. I can't find a specific date but DRC is expected to report on the Oct. 27-30th time frame.
10/12: DRC is finding resistance at $38.25 but it appears it only a matter of time before this is broken to the upside. I'm looking for DRC to move to our first target of $39.00 in the coming days and if the market remains strong we should see $39.95, perhaps next week. I suggest traders use strength to begin to exit positions or tighten stops to protect profits. A move to $39 should produce a +55% gain while a move to $39.95 should produce a +90% gain.
Current Position: Long November $40.00 CALL, entry was at $0.70
Entry on October 6, 2010
Earnings 10/28/2010 (unconfirmed)
Average Daily Volume: 570,000
Listed on October 5, 2010
Genco Shipping & Trading, LTD - GNK - close 16.45 change +0.06 stop 15.50
Target(s): 17.70, 18.05, 18.50
Key Support/Resistance Areas: 18.25, 17.75, 16.90, 15.75
Current Option Gain/Loss: -25.0%
Time Frame: 1 to 3 weeks
New Positions: Yes
10/16 (James): There is no change from my Thursday comments on GNK. Traders bought the dip again for the second day in a row near GNK's 100-dma and short-term support near $16.20. If this stock can rally past the October highs it could see a significant short squeeze. I wouldn't be surprised to see a rally toward $20.00. The Baltic Dry Goods shipping index, a measure of shipping rates, has been improving recently, which should bolster GNK shares.
10/14: Hmm... I am definitely seeing some mixed signals on GNK. The trend from late September is up with traders buying the dips, like they did today. However, on a very short-term basis, GNK has produced a bearish double top at $17.10. At the same time short-term support near $16.20 held up today. I do think GNK offers a lot of potential. The most recent data lists short interest in this stock at more than 18% of the very small float (27.7 million shares). That is a recipe for a short squeeze if GNK can show any strength. If the market pulls back again I would look for a potential entry point on a bounce from what should be support near $16.00 and its 50-dma.
10/11: Basic materials have been exploding as investors are flocking to hard assets and the stocks that mine and produce them. However, the shippers haven't fared as well and I believe they are due for a run higher as these materials need to be stored and shipped around the world. GNK has been forming an ascending triangle over the past six weeks and closed near the top of its base today. I would prefer to catch a pullback in the stock but a breakout play is also a good set-up. I suggest we enter long positions if GNK trades to $17.15 (a breakout) or $16.55 (a pullback). Our stop is below the stock's 20 and 50-day SMA's and an ascending trend line and will be adjusted as the trade develops.
Current Position: Long November $17.00 CALL, entry was at $0.80
Note: Readers who want to give this more time to work may want to consider buying the JAN 2011 $17.50 CALLS
Entry on October 12, 2010
Earnings 11/1/2010 (unconfirmed)
Average Daily Volume: 1.2 million
Listed on October 11, 2010
Thompson Creek Metals - TC - close 11.61 change -0.07 stop 10.45
Target(s): 11.75, 12.40
Key Support/Resistance Areas: 12.60, 11.80, 11.00, 10.55
Current Gain/Loss: +5.5%
Time Frame: 1 to 3 weeks
New Positions: Yes, on pullbacks
10/16 (James): TC experienced some volatility on Friday morning but shares settled into a sideways churn heading into the weekend. A little pullback toward the $11.15-11.00 zone could offer a new bullish entry point to buy the dip. I'm optimistic that this stock could trade toward $12.75 before hitting any significant resistance. FYI: I can't find any data on an earnings date for this company. Cautious traders will want to avoid holding over earnings, which makes this somewhat more risky.
10/9: It seems there is no stopping the basic materials sector as the lackluster employment report is sure to be followed by additional stimulus. Molybdenum is high strength metal and is used to make aircraft parts, electrical contacts, industrial motors and filaments to name a few. Technically, TC broke through resistance near $11.00 and touched its 200-day SMA on Friday. I would like to see the stock retrace some of those gains and suggest we enter long positions with a trigger of $11.10 which is -18 cents lower than Friday's close. Our targets are about +6% and +11.5% higher than our trigger.
Current Position: Long November $11.00 CALL, entry was at $0.90
Entry on October 12
Earnings 10/4/2010 (unconfirmed)
Average Daily Volume: 1.7 million
Listed on October 9, 2010
PUT Play Updates
Alliant Techsystems - ATK - close 73.82 change +0.05 stop 76.25
Target(s): 72.25, 71.50, 70.50
Key Support/Resistance Areas: 76.00, 74.00, 72.00, 71.25, 70.00
Current Gain/Loss: -34%
Time Frame: 1 to 2 weeks
New Positions: Yes, with tight stops
10/16 (James): Shares of ATK continue to churn sideways under resistance near $75.00 and its descending 200-dma. I don't see any changes from my Thursday comments. Readers may want to wait for a move under $73.25 before launching new positions. FYI: ATK is due to report earnings on November 4th, before the opening bell. Wall Street expects a profit of $2.81 a share.
10/14 (James): I can certainly see why Scott picked ATK as a bearish play. The rally has stalled at significant resistance near $75.00, which just happens to include resistance at the 68.2% Fib retracement of the summer sell-off. This same level is now seeing additional resistance with the simple 200-dma overhead. ATK produced a failed rally on Oct. 1st and it appears the stock just did it again today with a miniature bearish engulfing candlestick pattern. Now usually these patterns need to see confirmation. Readers may want to wait for a move under $73.25 before launching new positions. I wouldn't be surprised to see ATK retest $70 over the next few weeks.
10/9: ATK formed a perfect bearish head and shoulders pattern on its hourly chart turned lower right where it should have. Now we follow through to the downside. The stock remains below its 200-day SMA and I am ultimately looking for a move towards its 50-day SMA and our second target of $71.25. I do think a sell-off will likely get bought so be prepared to take profits or tighten stops to protect them.
Current Position: Long November $70.00 PUT, entry was at $1.45
Entry on October 4, 2010
Earnings: 11/11/2010 (unconfirmed)
Average Daily Volume: 310,000
Listed on October 2, 2010
PNC Financial - PNC - close 51.32 change -0.43 stop 54.92
Target(s): 51.05, 50.35, 49.50, 48.75
Key Support/Resistance Areas: 54.50, 53.50, 50.50, 49.50, 48.75, 47.00
Current Gain/Loss: -19.8%
Time Frame: 1 to 2 weeks
New Positions: Yes
10/16 (James): Financial stocks continue to under perform the rest of the market with the BKX and BIX banking indices both down more than -2.3%. Shares of PNC only lost -0.8% on Friday as the stock found some support at its late September low. Readers could look for a bounce back toward the $52.50 area as a new entry point to buy puts. The simple 50-dma is very clear overhead resistance. Keep in mind that PNC is due to report earnings on October 21st, before the market's opening bell. Analysts are looking for a profit of $1.36 a share. Normally, we prefer to avoid holding over an earnings report. FYI: The Point & Figure chart is bearish with a $48 target.
10/14 (James): Bingo! PNC has started to breakdown again. Financials were the market laggards today as investors worried about the state of foreclosures in this country. Shares of PNC lost -2.2% and broke down under a short-term bullish trend of higher lows. It looks like our first target was hit $51.05 this afternoon (the option was trading near $1.10 at the time). Personally I would aim for the August lows and beyond.
Current Position: Long November $48.00 PUT, entry was at $1.26
Entry on September 30, 2010
Earnings: 10/20/2010 (unconfirmed)
Average Daily Volume: 5 million
Listed on September 29, 2010